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RE: Are Canadian Banks INSOLVENT? If People Withdrew Their MONEY, Is It GAME OVER!?
I was looking at Canadians banks on balance sheet derivatives and they are big enough to topple them alone. The worst part is of course off balance sheet Derivatives in SPE and SPV's. Also Canada is using a zero reserve banking. Meaning the banks set their own reserve ratios as you can see!
Thank you I didn't know the reserve can be down to zero. Do you think credit union is less risky without the Derivatives time bomb?
I haven't looked too much, but I have seen on the balance sheet of one of Winnipeg's biggest CU MBS from their highest risk mortgages. $159M I think
I am working on doing CU and banks in other countries that will come in the coming weeks. Took about 4 hours putting together the above info.
I know how the derivatives work as far as stocks and options but how are the banks using them? Are the Canadian banks better or worse than the US ones?
Credit Default Swap is like insurance bet on some bond, mortgage backed security or credit instrument default. Investment Banks would act like a bookie taking bets and if nobody defaults that is great extra income to pay the big bonus to executives. The potential payout is usually many times the banks assets so if a lot of these bet go sour banks will go bankrupt, at that point all the money the banks spend lobbying will pay off as it is bailout/bailin time.
It created the Bailout of AIG in 2008
That makes sense. The banks buy cheap insurance and the investment banks make easy profit until things go against them.
Canadian banks issues MBS's! BMO issued AAA rated MBS's last year.